The Cold Standard

The frozen case offers a host of hot trends in natural and organic foods.

One of last year's hottest food and beverage trends came out of the supermarket freezer case, and, given the current economic outlook and consumer shopping habits, industry analysts believe this cold front has moved in for the long stretch.

U.S. retail sales of frozen foods and beverages through all retail channels totaled $55.9 billion in 2010, up 1.7 percent from the previous year, according to Packaged Facts, a division of MarketResearch.com, in its recently released report, “Frozen Foods in the U.S., 3rd Edition” (January 2011). The consumer market research firm, based in Rockville, Md., expects that number to reach $70 billion in 2015.

There's no question that frozen food sales have been driven in part by the economy, which has seen a decline in Americans dining out in favor of eating at home. Frozen foods provide a more affordable alternative to eating out, while at the same time satisfying consumers' eternal craving for convenience. But more recently, manufacturers have introduced a slew of natural, organic and wellness-oriented frozen food and beverage products that has brought attention — and health cred — to the category like never before.

Frozen SKUs in both the natural/organic and conventional sectors are growing faster than any other food and beverage category. Based on data from Product Launch Analytics, a Datamonitor service, Packaged Facts estimates that 728 new frozen food and beverage products debuted in the United States in the 52-week period ending Oct. 28. 2010. This number represents a 21 percent increase from the previous year and makes frozen foods the biggest category for new product introductions last year.

Natural Sales

While the frozen food and beverage category is enjoying overall growth, Americans clearly have a special connection to products offering natural/organic and healthier ingredients. Among all frozen foods, new introductions and existing products in the market last year, “natural” was one of the most frequently made claims, second only to “microwaveable,” notes Packaged Facts.

“Natural and organic frozen foods continue to be hot, despite carrying a generally higher price point in tough economic times,” observes Elise Cortina, director of public affairs for the American Frozen Food Institute (AFFI) and Frozen Food Foundation, both based in McLean, Va.

In the natural channel, sales of frozen foods reached $385 million based on SPINSscan data forthe 52 weeks ending Oct. 2,2010, according to the Packaged Facts report. The research also found that top frozen food sellers in natural food stores mirror those in traditional markets, with meat, poultry and seafood leading the pack; desserts in the No. 2 spot; fruits/vegetables and appetizers/snacks coming in third, and juices/beverages bringing up the rear.

AFFI believes the combination of natural/health-oriented and convenient is making friends in the frozen aisle.“Many natural and organic products, in addition to using nontoxic pesticides and fertilizers and made using antibiotic- and hormone-free ingredients, also have less fat, sodium and sugar, and make use of whole wheat grains and more vegetables,” notes Cortina. “These products appeal to the growing body of health-conscious consumers, especially those who are pressed for time.”

As Americans become more aware of the importance of eating healthfully, they are bound to ask: Which is healthier, fresh or frozen? Since 2006, AFFI has sought to answer this question by promoting the idea that “commercial freezing effectively locks In nutritional value.“Through its “Fresh Look Initiative” campaign, AFFI has spread the word that freezing at the peak of freshness means the nutrients are locked into frozen fruits and vegetables, whereas fresh produce loses nutritional value and quality over time.

A Case for Kids

While childhood obesity has made headlines in the United States for some time, initiatives that promote better health and nutrition for American children are gaining much-needed momentum. Whether it's First Lady Michelle Obama's “Let's Move!” campaign, school lunch reform or healthier kids' meals at fast-food establishments, the talk of the town, from D.C. to L.A., is about creating better choices for kids.

As a result, time-strapped families are turning to the freezer cases of their local supermarkets for solutions. From organic frozen baby food to healthy toddler treats, the freezer has become a hotbed of better nutrition for kids.

“There seems to be growing interest among mothers of infants and young children in feeding their children products that are marketed as'all-natural'or'organic,'or appear to otherwise be healthier than products not marketed as such,” says Cortina of AFFI.

“While parents are concerned about their own health, they are even more concerned about the health of their kids, and so they feed them more natural and organic foods than they eat themselves.”

—Tina Downey, Peas of Mind

Consider HappyBaby, a maker of frozen organic baby foods, whose founder and CEO, Shazi Visram, is featured in recent American Express OPEN/Gold Card television ads. In just a few years, the New York -based company has gone from startup to the leading premium brand of baby and toddler meals in the United States.

Then there's the Bay Area-based Peas of Mind, whose all-natural Veggie Wedgies — baked “French fries” made from real fruits and veggies like broccoli, carrots, cauliflower and apples — are taking the toddler scene by storm. “We find that while parents are concerned about their own health, they are even more concerned about the health of their kids, and so they feed them more natural and organic foods than they eat themselves,” asserts Tina Downey, Peas of Mind sales and marketing assistant. The company's newest introduction is Peas of Pie, a cheese pizza with broccoli and carrots surreptitiously blended into the crust.

According to Packaged Facts, frozen baby food sales surged dramatically last year. The report cited mass-market sales tracking data from SymphonylRI that put frozen baby food sales at $3.6 million for the 52 weeks ending July 17, 2010. That number is more than triple the sales from the prior period.

While Packaged Facts notes that frozen baby food has yet to become a heavyweight of total center-of-the-plate frozen food sales, it believes that the category “has a great deal of potential for increased sales,”particularly among those options that are organic, or at least all natural.

Frozen Foods on the Move

One of the biggest challenges to sales in the frozen baby food category is promoting such products, notes Packaged Facts. As a result, many consumers are still unaware of its availability. Packaged Facts suggests cross-merchandising might be the key to category awareness, pointing to Austin, Texas-based Whole Foods, which has had success with smaller freezers of HappyBaby and Yummy Spoonfuls in its otherwise shelf-stable baby food aisle.

Julie Henderson, VP of communications for the Harrisburg, Pa. based National Frozen and Refrigerated Foods Association, anticipates that more grocers, particularly those in the specialty or natural arena, will try their hand at selling frozen foods outside of the freezer aisle. An example would be merchandising frozen natural or organic fruits and vegetables from a portable freezer case in the natural/organic dry grocery aisle. Ice cream also lends itself to this concept, says Henderson, who describes innovative freezer cases that feature frozen space for ice cream and attached shelving for cones and toppings.

Wegmans Food Markets, based in Rochester, N.Y., launched a clever outside-the-freezer-case frozen food promotion earlier this year, when it began touting the health benefits of frozen fruits and vegetables in its pharmacies. From its “eat well, live well” display tables in the pharmacy department, Wegmans displayed bags of “Just Picked” frozen fruits as healthful, affordable and convenient meal solutions.

“Packaging is no longer simply a vehicle for delivering pretty pictures or a marketing message.”

—Elise Cortina, AFFI

Green Packaging

When it comes to natural and organic frozen foods, consumers are most concerned about the health, taste and affordability of what's inside the box, but that doesn't mean they don't care about the packaging itself.

“Packaging is no longer simply a vehicle for delivering pretty pictures or a marketing message,” asserts AFFI's Cortina. She sees frozen food products that use the package as the cooking instrument, packaging made from recycled and biodegradable materials, and an overall reduction in packaging as important environmentally conscious trends.

From the big guys like Omaha, Neb.-based ConAgra Foods, which introduced a frozen meal tray in 2008 that was made from post-consumer recycled plastic, to smaller natural food companies like EVOL Foods in Boulder, Colo., which recently released a line of four natural, organic frozen meals that come in a 100 percent compostable bowl naturally made from sugar cane within a 100 percent recycled paper box, greener packaging is another way that frozen food manufacturers are appealing to the consumer desire for wellness.

Restaurants Right at Home

When the economy took a dive, Americans took to dining at home. And while some say the worst is over, consumers have yet to return to restaurants with their pre-recession gusto. According to a January 2011 report from the NPD Group, based in Port Washington, N.Y., restaurant traffic has been down since 2008, and the number of U.S. restaurants declined by 1 percent in 2010, equating to a a loss of 5,551 restaurants, from 2009.

Research indicates that as consumers continue to give restaurants the cold shoulder, frozen foods have become a hot commodity. The results of a fall 2010 consumer survey from Packaged Facts Fall found that 19 percent of consumers said they were eating more frozen foods since the recession began. Of those consumers, 66 percent said they were eating less often at fast-food restaurants and 61 percent said they were eating less frequently at sit-down restaurants.

“A lingering effect of the recession is that consumers are eating at home more,” says Don Montuori, publisher of Rockville, Md.-based Packaged Facts. “This trend has had a positive impact on the frozen foods market, as consumers turn to the freezer aisles to supplement more expensive fresh produce and meats. Additionally, microwaveable frozen products provide a quick and easy lunch at work for those looking to avoid pricey lunches out.”

A growing number of savvy restaurant chains have realized that if their patrons won't come to them, they can continue to reach customers through the frozen food case of local supermarkets. P.F. Chang's, Jamba Juice, Romano's Macaroni Grill and many more restaurant brands are now available conveniently frozen and reasonably priced for value-conscious shoppers.